This week, the California Legislature is poised to pass AB 1207 (Irwin) and SB 840 (Limon), legislation that would reauthorize the state’s Cap-and-Trade program, now renamed Cap-and-Invest. These bills modernize how California prices its carbon emissions and ensure the state’s climate policies are continuously evaluated for effectiveness and equity.
What is Cap-and-Invest?
Cap-and-Invest is a market-based system where the government sets a limit (cap) on total greenhouse gas emissions and allows companies to buy and sell (trade) permits to emit within that limit, creating a financial incentive to reduce pollution. The proceeds go into a fund called the Greenhouse Gas Reduction Fund (GGRF), which pays for programs that reduce greenhouse gas emissions (GHG).
Key Updates in AB 1207 (Irwin) and SB 840 (Limon)
- AB 1207 Modernized Carbon Pricing: AB 1207 aligns California’s carbon pricing with federal standards by using the U.S. EPA’s cost of carbon. This ensures that the price of emissions reflects their actual environmental and economic impact.
- SB 840 Ongoing Oversight: SB 840 extends the requirement for annual evaluations of California’s climate policies, helping ensure transparency and accountability in how the state spends funds and implements policies.
- Support for Rural Communities: SAFER (Safe and Affordable Funding for Equity and Resilience Program), a program designed to ensure that Californians lacking access to safe drinking water, received $130 million. This is an essential program for rural communities that often lack access to a steady supply of drinking water.
- Land Access and Equity: The Agricultural Land Equity Task Force (ALETF), an independent body that works to develop recommendations to equitably increase agricultural land was funded at $1,000,000
- Economic and Climate : Free allowance reforms aim to reduce business flight due to climate regulations and are projected to increase GGRF revenue by $1 billion. Free allowances in the cap-and-trade program are permits given at no cost to help businesses gradually adjust to carbon limits while still encouraging overall emissions reductions. These funds will support California’s electrification goals while helping to minimize summer electric bills for households and small businesses.
Why This Matters for Organic Farmers
Organic farmers are already leading the way in climate-smart agriculture. The reauthorization of Cap-and-Invest represents a strategic investment in California’s climate future. While there were no specific investments in organic agriculture, these reforms pave the way for a larger pot of funding next year and future investments in organic agriculture.
